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On Optimality of a Class of Dynamic Myopic Policies for Continuous-Time Replenishment with Periodic Updates

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Abstract

This paper is motivated by inventory problems arising in supply chains characterized by continuous replenishment programs based on information exchanged (reviewed) only intermittently between a manufacturing system (supplier) and a customer (retailer). When the replenishment is once-per-period, rather than at any point of time, a well-known result is the optimality of the so-called myopic base-stock policy. We generalize the notion of the base-stock policy and study the optimality of the corresponding class of dynamic myopic policies. We identify a myopic policy and prove that although the replenishment rule is dynamic, this policy is optimal when the demands are stationary and the number of review periods tends to infinity.

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Authors and Affiliations

  1. Department of Management, Bar-Ilan University, Ramat-Gan, 52900, Israel

    Konstantin Kogan & Matan Shnaiderman

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  1. Konstantin Kogan
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  2. Matan Shnaiderman
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Correspondence to Konstantin Kogan.

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Communicated by Negash G. Medhin.

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Kogan, K., Shnaiderman, M. On Optimality of a Class of Dynamic Myopic Policies for Continuous-Time Replenishment with Periodic Updates. J Optim Theory Appl 151, 191–209 (2011). https://doi.org/10.1007/s10957-011-9855-x

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  • DOI: https://doi.org/10.1007/s10957-011-9855-x

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